To strengthen Vietnam’s supporting industries amid global shifts, the Government issued Decree No. 205/2025/ND-CP on 14 July 2025 (“Decree 205”), amending and supplementing Decree No. 111/2015/ND-CP (“Decree 111”). Effective 1 September 2025, the new regulations introduce stronger support for technology, workforce development, environmental standards, legal aid, and investment incentives, with the aim of boosting domestic manufacturing and attracting more investment as supply chains evolve.
Key Takeaways
- Stronger support measures: New and expanded policies promote R&D, technology adoption, and technology transfer, including access to national funds and programs. Certain collaborative projects may receive support of up to 50% of qualifying investment costs, and up to 70% for expert capacity-building.
- Consolidated incentives framework: Decree 205 consolidates tax, land/water surface rent, and other investment incentives under a single framework, and removes the previous SME-only limitation for PSIP incentives.
- Clear eligibility criteria: Four project-level conditions now govern access to investment incentives (product, technology/equipment, readiness, and supplier engagement).
- Transparent licensing process: A clarified process governs the issuance, amendment, and revocation of the Certificate of Incentives (COI), with updated dossiers and timelines.
- Post-incentive compliance: Biennial or ad-hoc inspections are introduced; annual reports must be submitted by 15 April each year following COI issuance.
Expanded definition of supporting industry
Decree 205 broadens the definition of supporting industries to include sectors engaged in the manufacture and processing of raw materials, supplies, materials, components, and spare parts for the production of finished products.
It also updates the list of prioritized supporting industry products (“PSIP”), retaining six key industrial sectors but adding more detailed categories, ensuring that incentives are better aligned with actual supply chain needs.
Enhanced support policies
Decree 205 introduces stronger support for organizations and individuals engaged in research & development (R&D) and technology transfer for PSIP. Key measures include:
- Expanded access to national resources: Eligible organizations and individuals can now access a range of national funds and programs, including the National Technology Innovation Fund, the National Foundation for Science and Technology Development, the National High-Tech Development Program, and other schemes under prevailing law.
- Financial support for joint projects: For joint R&D and technology transfer projects between enterprises and science & technology organizations, support may reach up to 50% of qualifying costs, including expenses for machinery and equipment, design, training, intellectual property (IP) registration, and expert consultancy.
- Capacity building for experts and advisors: Support of up to 70% of relevant costs is available for training and developing of experts and consultancy providers involved in PSIP-related activities.
Additional support for PSIP manufacturers includes:
- Environmental protection: Compliance with current environmental laws, with support for implementing relevant measures.
- Legal assistance for SMEs: Access to official legal databases and participation in State-run programs that provide legal information, training, and advisory services.
- Quality infrastructure support: Funding up to 50% for product testing, inspection and assessment, and certification processes.
Investment incentives
Consolidated incentive framework
Decree 205 streamlines and consolidates various investment incentives into a comprehensive framework comprising (a) Tax incentives as regulated under tax laws; (b) Land and water surface rent exemptions or reductions in accordance with land legislation; and (c) Other investment incentives as prescribed by applicable laws.
Notably, Decree 205 removes the previous restriction that limited certain incentives to SMEs manufacturing supporting industry products on the PSIP list. These incentives are now available to all enterprises, with SMEs still participating through the supplier engagement requirement described below.
Eligibility criteria for investment incentives
Projects seeking investment incentives must satisfy all four of the following conditions:
- Product-based condition: The project must produce items listed in Appendix I or II of Decree 205 (PSIP list). For products in Appendix II, a certificate of conformity with EU technical standards or equivalent is required.
- Technology and equipment condition: The project must use technology, machinery, and equipment suitable for manufacturing value-added supporting industry products. The production process must involve the physical or mechanical transformation of materials (e.g., mechanical, electrochemical, chemical, or thermoelectric processes).
- Project readiness condition: The project must be ready to commence production operations.
- Supplier engagement requirement: The project must engage at least one SME that manufactures and supplies essential materials, components, or parts used in the production of eligible supporting industry products.
Streamlined licensing procedures for COI issuance, amendment, and revocation
COI issuance
- Dossier requirements: Use the new templates for the application dossier and provide the additional mandatory supporting documents aligned with the four eligibility conditions set out above:
– Construction-law approvals: Evidence that all required construction procedures/permits have been approved by the competent authority under construction legislation.
– SME supplier contract: A contract with at least one SME manufacturer for the purchase of raw materials, materials, or principal components/parts essential to the incentivized supporting-industry products.
– Commercial proof of export/sale: A set of documents evidencing export or domestic sales of the supporting-industry products for which incentives are claimed (e.g., sales contracts, purchase orders, invoices, customs declarations, bills of lading).
- Submission channels:
– For SMEs: File with the Provincial People’s Committee (the “PPC”) of the project location. Submission may be in person, by post, or online via the PPC’s public service portal (if any).
– For other enterprises: File with the Ministry of Industry and Trade (the “MOIT”). Submission may be in person, by post, or online via MOIT’s Public Service Portal.
- Issuing authority: Defined competent authority for issuing COI.
– For SMEs: The PPC issues the COI and must notify MOIT upon issuance.
– For other enterprises: MOIT is the issuing authority
COI amendment
Where any information recorded in the COI changes, the enterprise must submit an amendment dossier to the original issue authority for review and assessment
COI revocation
The COI may be revoked on any of the following grounds:
- During production, the project or incentivized products change and the organization/individual fails to report to the issuing authority, or reports untruthfully, inaccurately, or incompletely;
- Inaccurate information is provided, or the application dossier for issuance/amendment contains forged documents;
- The project no longer satisfies the conditions for incentives under Decree 111 and Decree 205;
- Other cases based on recommendations of an inspection team or other competent authority; or
- The enterprise requests the competent authority to revoke the issued COI.
Post-incentive compliance: Inspection and Reporting
Post-incentive inspection: Competent authorities may conduct inspections regularly (every two years) or on an ad-hoc basis to evaluate compliance with Decree 205 and the conditions stated in the COI.
Reporting obligations: Enterprises are required to submit an annual report to the competent authority on the status of project implementation, the incentives received, and how they were utilized by 15 April each year, starting from the year following the COI issuance.
Conclusion
Decree 205 marks a meaningful recalibration of Vietnam’s supporting-industry policy. It broadens access to incentives while introducing more rigorous eligibility criteria and post-issuance monitoring. Now, enterprises should undertake a thorough review of the criteria and conditions prescribed under Decree 205 in light of their actual production activities and product lines, to identify potential opportunities for obtaining incentive confirmation under the new framework.
For SMEs, while the removal of SME-exclusive incentives may seem like a step back, the supplier engagement requirement actually strengthens the role of SMEs positioning them as essential partners in eligible projects.
For further information, please contact:
Pham Thi Thanh Lan, Partner, Indochine Counsel
lan.pham@indochinecounsel.com
